Ripple’s CTO addresses concerns over the classification of XRP as a security and provides clarification on sales and operations related to On-Demand Liquidity (ODL).
Key Points
- Pro-XRP researcher questions Judge Torres’ verdict classifying XRP as partly a security and partly not.
- Ripple’s CTO clarifies that institutional sales of XRP are securities, but other sales and XRP sold by executives are not.
- Concerns raised about whether XRP sold for On-Demand Liquidity (ODL) should be considered securities.
- Ripple’s CTO confirms legal team is working on clarifying the issue and discusses limitations on ODL-related sales with a US Nexus.
Pro-XRP blockchain researcher Leonidas Hadjiloizou has raised a question regarding the recent verdict by Judge Analisa Torres, which classified XRP as partly a security and partly not. In response, Ripple’s Chief Technology Officer (CTO), David Schwartz, has shared Ripple Labs’ position on the matter.
According to the ruling made by Judge Torres, Ripple’s XRP sales to financial institutions are considered securities. However, programmatic sales, other distributional sales, and XRP sold by Brad Garlinghouse and Chris Larsen are not classified as securities.
Hadjiloizou’s question stemmed from the fact that Ripple had ceased its institutional sales of XRP and replaced them with sales of On-Demand Liquidity (ODL) XRP. This raised concerns about whether all XRP sold by Ripple for its ODL service should now be considered securities.
XRP is not a security.
This victory for @Ripple is a win for the entire industry and a step toward regulatory clarity in the U.S.
A huge thank you to @bgarlinghouse, @chrislarsensf, and @s_alderoty for their leadership and the #XRPCommunity for their continued support.
— Ripple (@Ripple) July 13, 2023
Ripple CTO Shares How Things Stand
In response to Hadjiloizou’s question, CTO David Schwartz stated that Ripple’s legal team is currently working on clarifying this issue. He confirmed that Ripple is not currently selling XRP in relation to ODL with a US Nexus, but this does not seem to be a major concern for the company.
Ripple (according to its quarterly reports) used to have institutional and programmatic sales. Programmatic sales stopped in Q4 2019 while institutional sales were replaced by ODL-related sales.
According to the summary judgment, are ODL-related sales now considered securities? pic.twitter.com/dA25uOQp5U— Leonidas (@LeoHadjiloizou) July 13, 2023
Despite not being able to engage in ODL-related sales with a US nexus, Ripple can still conduct ODL operations in the US as long as it does not issue any XRP itself. The term “US Nexus” refers to financial operations in a foreign currency that involve US dollar-denominated transactions or clearance through the US financial system.
Schwartz’s response on Twitter implied that not being able to sell ODL XRP with a US Nexus is not a significant obstacle for Ripple’s operations.
When asked by another Twitter user about the legal status of XRP released by Ripple from escrow on a monthly basis since January 2018, Schwartz did not provide an answer.
As of the time of writing, XRP is currently trading at the $0.7727 level, experiencing a nearly 64% increase in the past 24 hours, according to CoinMarketCap data.
